I have to agree with Brian. The DTD transportation is the best of the offsites, but you might save $30 - $40 a night staying at a DTD property vrs POR, and a good chunk of that savings will get eaten up with the cost of airport transportation. Besides that, if there are 5 of you going, you'll be limited to which properties in you can stay. If you stay onsite, you can take ME, which is free.
We stayed off site several years ago at a "main gate" hotel, and the transportation was pretty bad. 1-2 trips in the morning, 1 trip mid day, and 2 trips at night that were shared with several other hotels. The night trips were a real nightmare, really really crowded buses. It took over an hour one night to return to our hotel from MK, and it was never under 45 minutes. It can't be more than 15 minute drive in a car.
If you don't want to stay onsite, I would really suggest you rent a car. You should be able to rent a car in Jan for around $150 a week, or about $22 per day. If you stay off site, you'll have to pay for airport shuttles or cab/town car fare anyway. Round trip shuttle service to the WDW area is $31 per person. Wow if you have 5 people in your party, that pays for your car rental car. If there are 5 of you, your really might want to consider renting a 2 bedroom condo. It'll cost you about the same as a 3* hotel, and you'll have much much more space, including a separate room for the kids 7 possibly a washer/dryer in your unit. Then you'll have the kitchen to use for meal prep as well.
Personally if I had to chose between fixing a few meals at home or using off site transport to Disney in order to stay within my budget, I'd absolutely choose to cook a few meals. I like to cook, and meal prep takes a lot less time out of my day vrs. the offsite shuttle...but that is just my opinion.
Here's how the numbers look to me:
3 star offsite hotel per night $70 (less if you are willing to go with Priceline) should be able to get a condo in Jan for about the same, maybe even less on skyauction.
car rental $22
gas $4
parking $10
off site cost per night: $106
You'll also have the advantage of eating off site at less expensive restaurants to save even more $$, and the option to do some shopping or other things you wouldn't do if you stayed on site.
Good luck choosing!